ORLANDO, FLA.--Insurers must be bold in the recession and not let fear govern their decisions during the economic downturn, futurist David Smith told an industry conference here.
In a keynote address at the ACORD-LOMA Insurance Systems Forum, Mr. Smith, chief executive officer of Global Futures & Foresight, said the worst thing insurers can do in this economic downturn is fire talent, cut back on technology investments, reduce new product development, and replace growth-oriented CEOs with cost-cutting CEOs.
During the previous recession, many companies that were top 10 in their sectors dropped off the list, and less than 10 percent of those companies subsequently made it back on the list, Mr. Smith explained. "This is not a time to do nothing," he warned.
Conversely, he noted that many large businesses formed in the midst of recessions and many successful products were launched as well. For example, he said MTV and CNN got started in 1981 and 1980, and Dyson in the early 1990s. Additionally, he noted Burger King launched the whopper in 1957, and Fortune magazine launched in 1930 during the Great Depression.
These organizations took advantage of established companies pulling back in uncertain economic times, and they understood that a recession does not stop people from "needing and wanting things," Mr. Smith said.
Insurers should use this time to launch new products and get a jump on the competition, he added. When the recession ends, it will be too late as competitors will move into the space and launch products themselves.
Quoting Warren Buffett, Mr. Smith advised insurers, "Be fearful when others are greedy, and be greedy when others are fearful."
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